Sirius-XM: October Surprise for the Two Morgans?

By Dana Cimilluca

Satellite radio may soon provide music to the ears of bankers at J.P. Morgan and Morgan Stanley.

Before the credit markets imploded, and leveraged buyouts turned from a major money-making proposition to a cost center, the fees the banks stood to reap from the proposed merger of Sirius and XM seemed positively paltry. After all, the banks arranging the LBO of terrestrial counterpart Clear Channel Communications stood to pull in $500 million or more. What is more, no one really expected the satellite deal to get regulatory approval.

The financial world in many ways now is turned on its head. The banks on deals like Clear Channel are likely to see all those fees swamped by credit-market losses and the fees the two Morgans could reap from their work on the satellite deal don’t look so bad any more. And the outlook for approval is brightening by the day.

Cowen & Co., in a note today to its clients, says the odds of approval for the Sirius-XM deal — which was announced in February — are the “best ever.” The key green light the deal still needs is from the Federal Communications Commission. That could come as early as next month, the report says. The market is coming around to this view, too. The gap between Sirius’ stock-based offer price and the current XM share price has narrowed to 12% from more than 20% not long ago. That reflects increased optimism that the deal will go through.

About those fees for the former siblings in the House of Morgan. Morgan Stanley, Sirius’ banker, has been promised a fee of $10 million if the merger is completed. It may also get an “incentive fee” of as much as $7.5 million. J.P. Morgan, meanwhile, gets $12.5 million from XM, a big (unspecified) chunk of which is conditional on the merger closing. A payoff like that nowadays is enough to put a banker in orbit.

If you're listening Mel, do whatever needs doing to bring this stock up...Merger or no Merger!

10:35 pm September 22, 2007

susanp wrote :

I'm in siri at 21k-5404 shares. After siri's ride look out visa- I'm having a blast !!!!

3:31 am September 22, 2007

Sweet Nick wrote :

I bought SIRI as a fluke for $7 thinking about the time I spent in cars in nowhere land before I retired. Forgot about it and looked up and it was under $3.50 and been about hesistant on selling. I planning to hold on and buy more believing the merger will be approve as it should be.

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